Germany is going through a challenging period but is well equipped to deal with the problems that pitched Europe’s biggest economy into recession over the winter, according to Chancellor Olaf Scholz.
“War, energy crisis, inflation, the consequences of the coronavirus pandemic — all these factors will not leave your companies unscathed,” the German leader said Wednesday in a speech to business executives in Dusseldorf.
“Such external factors cannot be turned off at the push of a button,” Scholz said, insisting that Germany had “come through this period of crisis much better than many had predicted.”
Action taking by his ruling coalition, including expanding gas imports and storage, rapidly installing LNG terminals and putting a lid on energy prices were proof that Germany “is perfectly capable of mastering the problems of our time,” he added.
Germany is still reeling from two quarters of contraction around the turn of the year and the Economy Ministry warned Monday that a “generally expected recovery still failed to materialize in early summer.”
“Still weak external demand, the continuing geopolitical uncertainties, the still high rates of price hikes and the increasingly noticeable effects of monetary tightening are damping a stronger economic recovery,” according to the ministry’s monthly report.
The outlook is less than rosy. Output will barely expand in the second half of the year, according to a Bloomberg poll published Monday.
Having already stalled in the April-June period, the economy will stagnate again in the three months through September and then expand by just 0.1% in the final quarter, the survey of economists conducted Aug. 4-10 showed. That’s down a 10th of a percentage point from expectations for each period just a month ago.
The economy is still expected to contract by 0.3% for the full year, and will likely only rebound by 0.8% in 2024, down from a previous prediction of 1% expansion, the economists predicted.
